In the 35 years since I joined the World Bank, there have been vast changes in development. The reduction in the rate of poverty was never as sharp as in the first part of the 2000s, along with notable improvements in various social indicators. Striking has been the rise of Asia. Yet, with the rise in population, the sheer numbers of people in poverty worldwide stayed at an all-time high, at over 1 billion people. Despite considerable progress, reducing poverty remains the greatest developmental challenge.
During this time, thinking on development has gone through sea changes. Thirty-five years ago, physical capital and infrastructure were considered the prime contributors to higher incomes. In the following decades, human capital and investments in people (rightly) rose in acceptance as determinants of progress -- in their own right and as contributors to economic growth. In the 2000s, the stress on infrastructure has returned, with some development professionals even equating (simplistically) infrastructure investment with growth. World Bank lending for infrastructure has reflected this changing emphasis.
Agriculture was a top priority in the 1970s and '80s. The World Bank's research made a crucial contribution in agricultural price policies as well as trade policies. The emphasis on agriculture waned in the 1990s and much of the 2000s, and many rightly blame today's rising food prices on the neglect of investment in agricultural productivity, especially in Africa, in recent decades. Agricultural productivity has again become a vital ingredient in development as population growth and climate change place enormous stress on agricultural systems.
The rethinking also shifted the World Bank's focus from providing financing for investment projects to providing program lending to support economic policy management. In the 1980s, the Bank ramped up its lending to support macroeconomic reforms and emphasized sector-oriented programs. Disillusionment with structural adjustment and conditionality followed, but the search for programmatic approaches continues. There is a growing realization that solutions need to be grounded on firm support in countries. And with the emphasis shifting to institutional reforms, one-size-fits-all would not be the way to go.
The evolution of thinking also took on board the idea that multiple factors -- physical capital, human capital, and natural capital -- have a decisive impact on development trends. The emphasis on human and social capital followed the earlier exclusive focus on physical and financial capital. The series of natural disasters and the related concern over global climate change have recently drawn attention to the role of natural capital. Yet investment in natural capital lags because of a mistaken perception that its benefits will accrue only in the distant future.
In the early 1990s, then World Bank President Barber Conable underlined the inter-linkage among economic growth, social progress, and environmental sustainability. He envisaged a series of three World Development Reports -- on poverty; on growth; and on the environment. I directed the one on growth in 1991 and recall President Conable and Chief Economist Stanley Fischer ensuring that the growth story addressed the environment. President James D. Wolfensohn placed a personal emphasis on the environment. The current President Robert B. Zoellick has promoted initiatives on biodiversity and climate change. These are issues where worldwide actions have historically fallen well short of what is needed.
Today, global crises affect development outcomes more than at any time in history. Recognizing interconnectivity in responses will be ever more important to address the multiple challenges posed by the scarcities of food, energy, water; by the threat from financial crises, natural disasters and climate change; and by the urgent need to address rising unemployment and growing inequities.
During the past two years of the financial crisis, the World Bank has been a global player, disbursing more financing than any other financial institution, including the International Monetary Fund. The challenge now is to connect global and country actions, harness innovation across a broad front, and promote a development path that is more sustainable.